Lessor LCI is eyeing a future bow-wave of replacement activity in the helicopter market, even as operators struggle to meet their near-term requirements for lift.
Jaspal Jandu, LCI chief executive, says the helicopter market is currently “tight”, with demand largely outstripping supply.
He sees brisk demand from all sectors – including oil and gas, emergency medical services, and offshore wind – combined with a manufacturing sector that is struggling to ramp up production of new helicopters or supply spare parts in a timely fashion as creating a shortage of available aircraft.
“There is a really unique confluence of factors in the helicopter market.
“If an operator is looking at lift in late ’23 or Q1 2024 they are probably already too late – [leasing] discussions need to have already happened or at least be happening,” said Jandu, speaking at the recent Heli-Expo event in Atlanta.
The tight market is manifesting itself in longer lead times needed to secure helicopters for future contracts, multiple bids on each aircraft, and higher lease rates – albeit that the cost of capital has also risen due to soaring interest rates.
Jandu also sees the onset of a widespread replacement cycle, with the industry downturn between 2015 and 2020 having delayed its arrival.
“But at some point older airframes will hit service limits, or safety features will not be sufficiently modern.
“That’s not to say older helicopters don’t have their uses… but they will not be suitable for their primary application. At some point the replacement cycle will keep building up,” he says.
Jandu points to a recent forecast from Airbus Helicopters that predicts the industry will receive 16,200 new helicopters over the next 20 years – over 800 annually – 74% of which are for fleet replacement.
In the short-term, the pace of replacement is being tempered by the ability of helicopter manufacturers to increase output, he argues.
In addition, the industry – manufacturers, lessors and finance houses – “really needs to come together” to help fund those new helicopters, which he estimates will require some $5-10 billion per year.
That could include making better use of export-credit facilities, as well as more financial assistance from airframers: “They want to sell more equipment into the industry,” he notes.
